NJ Supplement Firms Guilty of Criminal Contempt

TRENTON, N.J.—Continuing to manufacture and distribute dietary supplements while under a court order to cease operations for violation of federal law is likely to cost two New Jersey companies and their owners serious time and money, after a federal jury on June 1, 2011, found them guilty of multiple counts of criminal contempt of court for violating a federal consent decree. The Paterson, N.J.-based firms, Quality Formulation Laboratories and American Sports Nutrition Inc., and principals Mohamed S. Desoky, Ahmad Desoky and Omar Desoky, had signed on to a consent decree in U.S. District Court, District of New Jersey, on March 16, 2010. The decree resolved a civil action filed by the Department of Justice (DOJ) on behalf of FDA that ordered the companies to shut down all manufacturing and distribution of food products.

As reported by INSIDER in July 2009, FDA inspections found several manufacturing deficiencies noted including failure to follow cGMPs (current good manufacturing practices), labeling problems including not disclosing major food allergens, and storage of food in filthy conditions. The March 2010 consent decree of permanent injunction prohibited the firms from “manufacturing, preparing, packing, labeling and distributing” any food product/supplement until it addressed the deficiencies and received permission from FDA to resume operations.

The defendants are due to be sentenced Sept. 7, 2011, after they were found guilty of the following charges:

Violating the consent decree “almost immediately” after its entry by relocating operations to a new location in Congers, N.Y.

Continuing receiving and manufacturing operations at the Paterson, N.J., facility after entry of the consent decree.

Receiving and distributing product from the Paterson, N.J. facility between September 2010 and January 2011 in violation of the court order.

While not involved in the case, industry attorney Marc Ullman noted there are takeaway lessons for other manufacturing firms. “The important thing to understand is if you are really out of compliance, a condition of continued operations is likely to be a consent decree, and you don’t want that for your company,” he said. “They’re onerous and there is potential for future issues, even if your conduct isn’t flagrant and outrageous as it was in this case. This could also signal a move to impose further sanctions against companies that don’t get it right.”
Sources:

U.S. Department of Justice: Two New Jersey Dietary Supplement Companies and Their Principals Found Guilty of Criminal Contempt